– There’s a point of diminishing returns to work, and it’s closer to 40 hours a week than we’d think
– Meeting with employees is productive; meeting with consultants or outsiders is not
But how actionable is this? While I completely understand diminishing marginal productivity, it’s really difficult to observe in the moment. How can we build in triggers to know when our productivity is going down?
Use your support network and ask for help as soon as you’ve reached the point of diminishing returns
Ask for feedback even when the process is painful
Practice vulnerability. Acknowledge publicly every time that you don’t know something or that you’ve made a mistake. Start among friends to build your confidence, and expand out from there
Force yourself to speak up at every meeting.
Grant yourself permission to be mediocre, and have attention directed at that mediocrity. It’s the only way you’ll gain new skills and stretch.
Doing the right thing poorly is better than doing the wrong thing well.
Why can’t companies foster this culture correctly? One quote in the article notes, “My boss wants innovation as long as it’s done perfectly the first time.” That type of hypocrisy is what leads to a stifling culture that claims to believe one thing but actually supports another set of behaviors.
I think this article is further pressing at the notion of “intellectual honesty”. One of my favorite interviews (Dominic Orr of Aloha) discusses how important it is to build a culture of being vulnerable, as the DeLongs mention in the HBR article above.
What gets a company into the 10x forward price/revenue multiple club?
– Competitive advantage period — how wide is the ‘economic moat’ that protects your castle, and how long will it take for that moat to dry up?
– Network effects — increasing value of using your product as more people use it. A positive feedback cycle that gives you an unfair advantage the more customers you get.
– Predictability — make your revenues repeatable, e.g. get people to subscribe so you always have a ‘base’
– Switching costs — decrease customer churn by giving them a reason to stick with you even if competitors undercut your prices.
– Margins — make a lot of money from every revenue dollar. Duh.
– Marginal margins — make more money as you make more revenue. Less intuitive, but it means to make sure you select a business that scales well. Labor costs = death; information goods = amazing.
– Customer/Partner concentration — are your revenues reliant on a relatively small number of customers who might leave you? Does any one customer (or partner or supplier) have too much control over your company’s future revenues? Arguably, partners are getting even more important, as so many web businesses make money as affiliates or platform applications for another company’s product. The article focuses on partners as a source of revenue, but dependence on a partner’s platform (e.g. all the apps who might have been killed by Apple’s announcements today) is also threatening.
– Cost per customer acquisition — is your marketing really expensive? Or do you grow organically well? Bezos quote is perfect: ““More and more money will go into making a great customer experience, and less will go into shouting about the service. Word of mouth is becoming more powerful. If you offer a great service, people find out.”
– Growth, with caveats — growth is good, but it can’t be “profitless prosperity”. Growth can be misleading if it can’t be sustained profitably over time. And growth because you’ve discovered a new market will bring other competitors, so if you haven’t established barriers to entry, you’ll see margin erosion (possibly for Groupon?)
– Cash — collect your cash before you recognize revenue; and spend less of that cash on capital investments to run your business
– Real options — ability to naturally expand your business into adjacent markets without diluting your brand or efficacy
How can a company manage expectations to get strong multiples in the market then? And, since that analysis was based on public companies with lots of disclosures, what can private startups learn from the scorecard?
– Delay announcements of products but hint about them secretly, to make your company seem dangerous and competitive. Kind of like installing lots of missile launchers on your beaches (arguably, people you hire fall into this function) but not showing how many missiles you have.
– Cohort analysis — show that earlier cohorts of customers use your product more frequently / engage for longer periods of time per use / pay more as you get more customers registered. I.e. network effects.
– Footprint — don’t limit your product to a single platform, region, or business model. Clearly you can’t overstretch, but have at least two major stories for each.
– Be noteworthy — take risks, develop a brand personality, and spend time doing things that are worth talking about. Instead of spending too much on marketing.
– Focus, but don’t limit yourself — a key decision involves your branding and even company name. If you’re a printing business, printing.com is better than paperprinting.com, because it leaves you open to printing on tshirts and birthday cakes later.
Here’s a common story from the zoo. We raise an animal, say a lion or a penguin, in captivity from birth. Zookeepers are careful to immerse the lion in a world perfectly constructed to look and feel like the savanna. The penguin lives in his proper Antarctic zone, designed to look like the ices of the tundra. They are both fed, on a regular schedule, and kept happy and healthy. So long as they perform for the zoo’s visitors.
Yet the animals, with endless possibilities at birth, quickly come to know the limits of their potential at the zoo. The savanna zone has a wall. It is constrained freedom, an existence manufactured by outside observers as the image of what a lion ‘should’ grow up in. And so, should that lion be released from captivity later, the freedom would be deafening. Undoubtedly, it would be unable to function without a daily feeding and a bath. That has become its reality, and understanding of the world.
We understand these shortcomings, and continue to raise lions in zoos for the good of the onlookers. But why do we educate our children this way?
Earlier this week, Peter Thiel named his 20 under 20 fellows, who he would pay $100,000 to drop out of college to pursue other interests for two years. In doing so, Thiel raises questions about the value of higher education. If these high-performing kids go on to become extremely successful, it evidences the declining necessity of higher ed for success.
But, as Andrew Kelly points out, these were already the most academically gifted students in the country. They don’t need college, but they also don’t need the Thiel fellowship. They’re already successful in their own right. Thiel’s program proves nothing about college as an institution.
In reading their short biographies, I couldn’t help but reflect on my own experience in public schools for twelve years of my life. One difference is quite clear: I was raised in captivity. Each year had its walled garden of lessons and allowances. I learned in exactly the way that educators had decided I should.
We should know better. Like designing exhibits at a zoo, people are woefully inadequate at circumscribing worlds for others to live in. We systematically underestimate the capability of subjects, be they animals or young people, to care for themselves. And in doing so, we limit their potential.
Worse still, Thiel’s idea strikes a nerve because we’ve been made to feel a certain insecurity about our learning. We think we need rigor, requirements, and standards in order to learn and grow. So we set standards and require demonstrations of skill.
Thankfully, my most formative years in captivity were spent with a back door. Spring 2001 was my first encounter with then-nascent Wikipedia. It was rough, articles were dramatically incomplete, and teachers were afraid of it. And it came with related links. Suddenly the great depths of human knowledge were interconnected and at my fingertips.
A few days ago, my friend Mindy (deservedly a Thiel fellow but probably too modest to apply) asked whether knowledge was too easy for our generation. She focused on the once-prevalent struggle to earn knowledge by finding it. Now that information is so easy to find, she asks, have knowledge and critical thinking become superficial?
I think this question is deeply intertwined with how we educate kids. When your curriculum is on rails, learning is a direct-to-DVD movie. Just read the spoilers, the bullet points, and the SparkNotes, know the destination and your ETA, and you can fall asleep for the rest of the ride — wakefulness is simply not worth the effort. We don’t short-circuit our learning because information is too easy to come by. Instead, we seek out easy information because we know the answers are canned anyway.
Alfie Kohn has done extensive research on the way intrinsic motivation can be undermined by extrinsic incentives, in business settings and at school. When time is precious and you’re evaluated by your knowledge of the occurrences in a book you were forced to read, the bulleted summary is a strictly dominant strategy. Lions in captivity don’t move around much except when there’s a steak involved.
The key to all of this is who selected the knowledge to be imparted. Students, it turns out, are quite capable of choosing their intellectual adventures without coercion. Every one of them, not just the geniuses. I did my fair share of leveraging Wikipedia to avoid wasting my time on coerced learning. But I also took the back door out of my cage when no one was looking. I followed Wikipedia trails, swinging from one link to the next in a forest that has no walls.
I don’t remember much of eighth grade social studies’ cursory treatment of the Constitutional Convention, but I do remember reading the Wikipedia articles on every one of the 27 amendments, which sparked my brief but intense obsession with Constitutional law. I remember secretly reading about string theory while bored of class exercises about the water cycle.
Our technology has categorized and linked the great body of human knowledge. And connectedness breeds discovery, mapping, and synthesis. All we need to do is let go of our insecurities and free children from the world we created to protect them from their own power. Each of the Thiel fellows did this early on, and we assuredly will be celebrating their accomplishments in a few years.
So maybe we could all use a little unschooling. Let go of the carrots and sticks, and stop trying to define what should be known only so as to guarantee it will be forgotten. I think we all remember tiring of the savanna exhibit long ago. Kids don’t need zookeepers, they just need to learn how to hunt.
If sleep forces us to consolidate our memories every day, the act of graduating initiates a more profound sleep. Today I’m confronted with the formidable task of sleeping on four years of academic work. I have two hours to reduce the material I’ve spent 2,184 hours of class time learning into three piles: the backpack (to reread), the binder (to reference), and the basket (to recycle).
But, wait. I didn’t actually spend 2,184 hours of class time on these readings, notes, and lecture slides. Be real, Jesse. I probably skipped over half of the actual class time required to generate all of this paper. So let’s not be too sentimental about it.
The truth is, some entire classes — 42 class-hours plus countless hours of work outside — get thrown straight into the basket pile with no due process or review. So what separates the lessons I’ll carry in my backpack forever from the ones that have already long been thrown into the wastebasket?
Analyzing the mountain of paper is instructive. There’s a strong correlation between the size of the pile and its chance of getting summarily trashed. Often, it turns out, professors have a certain self-consciousness about their classes, and it shows in how much paper they generate. Fifty-page lectures, hundreds of pages of readings, required note-taking, and so on. These forms of coercion amount to a way of saying “I’m important, pay attention to me. Or else.”
Now, I’m no coward with respect to reading. I love information. And a long reading is justified when it’s the sort of pithy text that tickles your consciousness with every turn of the page. So don’t get me wrong. I’m not advocating for ‘dumbing down’ school or reducing academic rigor.
But there’s a big difference between rigor that’s out to teach something and rigor that’s out to prove something.
Ideas that have made it into my backpack — the things that I will forever carry with me into every organization, and evangelize to every person I meet — are deceivingly simple. The Heath brothers would say that such ideas are ‘made to stick‘. Simple, unexpected, concrete, and empowering.
It goes beyond the stickiness of a few ideas, however. The classes worth remembering are often consummately so. There are entire bodies of knowledge I love and repeat constantly in my life. Shoutouts are due… to organizational behavior (MGMT 238 – Adam Grant), emerging economies (LGST 216 – Phil Nichols), and information strategy (OPIM 469 – Lorin Hitt and OPIM 666/210 – Eric Clemons). Their entire classes have made it into the backpack and the binder, and I will remember them for the rest of my life.
What these four professors did was extraordinary, and it ultimately amounts to bravery. A quality that I’d call “courageous distillation“. Looking at an overwhelming trove of knowledge in one’s subject area, and spending significant energy deciding what’s important, distilling it into memorable stories. And more importantly, having the courage to decide that, even if a textbook exists for the subject, most of it is actually not important, and won’t make it into students’ backpacks.
Unfortunately, that type of courage is almost entirely lacking in academic disciplines with texts. Somehow, having something bound with a shiny cover that others in the field use gives one license to lose all creativity. But teaching for actual learning will always be an art, and finding lessons worth remembering is a subtractive process.
Seems to me that the key to all of this is being willing to let go of some ego, and to actually make decisions — to let go of notions that every method and finding in one’s entire field of study deserves regurgitation, and find the messages at the core. So professors, if you’re listening, rewrite the textbooks, create classes that are uniquely your own, and rediscover the essence of what you’re teaching through students’ eyes. And do that over and over, every year. You might even learn something in the process.
These lessons aren’t limited to academia. As I move forward in my life, I need to constantly remind myself that not everything I do is important, and to be courageous enough that I’ll periodically re-evaluate my work and distill it further. I will never be afraid of empowering others to take my life’s work and do more with it than I had dreamed.
I’ll forever thank the nine professors whose class notes made it into the backpack and the binder. Beyond those few, I’m just glad that paper, like memory, is recyclable.